Construct an operating statement (from Gross Sales to Net Sales to Net Profit) f
ID: 2427626 • Letter: C
Question
Construct an operating statement (from Gross Sales to Net Sales to Net Profit) from the following data and compute the gross margin percentage. [Remember, Net Sales typically represents 100% on the Income Statement and every line item on the statement is a percentage of Net Sales. These operating ratios are important analytical tools for measuring operating performance.]
Purchases at billed cost $15,000
Net sales 30,000
Sales returns and allowances 200
Cash discounts given 300
Cash discounts earned 100
Rent 1,500
Salaries 6,000
Opening inventory at cost 10,000
Advertising 600
Other expenses 2,000
Closing inventory at cost 7,500
Explanation / Answer
Statement showing computations Particulars Amount % of Net Sales Gross Sales 30,500.00 Sales Returns and Allowances 200.00 CashDiscount Given 300.00 Net Sales 30,000.00 Purchases at billed cost 15,000.00 50.00% Cash discounts earned 100.00 0.33% Net Purchases 14,900.00 49.67% Opening Inventory 10,000.00 33.33% Closing Inventory 7,500.00 25.00% Gross Margin = Sales + Closing Inv - Purchases - Opening Inv 12,600.00 42.00% Rent 1,500.00 5.00% Salaries 6,000.00 20.00% Advertising 600.00 2.00% Other Expenses 2,000.00 6.67% Net Profit = Gross Margin - Expenses 2,500.00 8.33%